The suspension of the US debt crisis is unspeakably over: the Treasury Department is backing investors to bet that the 10-year yield will break 5%

The Zhitong Finance App learned that the US Treasury bond market has continued to be sold off recently, and long-term yields have continued to rise. After the 30-year US Treasury yield rose to a high level in nearly 20 years, investors expect that the 10-year US Treasury yield may also break through an important hurdle. According to a media survey, about two-thirds of respondents believe that the 10-year US Treasury yield will exceed 5% by the end of this year.

A total of 392 market participants were interviewed in this survey. Among them, 38% of respondents expect the 10-year yield to break through 5% in the fourth quarter, while another 28% believe this level may be reached as soon as August or September. At the same time, the proportion of respondents who expect the 10-year yield to continue to rise in the next month also reached the highest level in nearly four years, reflecting a marked rise in market concerns about the further rise in long-term financing costs in the US.

As of early trading in New York on Wednesday, the 10-year US Treasury yield was around 4.65%, down from the 4.75% high hit earlier this week. Earlier, the US Treasury unexpectedly announced that it would expand the scale of long-term treasury bond repurchases and drive a rebound in long-term US debt. The Ministry of Finance said it will at least double the scale of repurchases of 10-30 year treasury bonds. The market generally sees this move as the Ministry of Finance's response to the recent rapid rise in long-term returns.

In the past 19 years, the 10-year US Treasury yield has only briefly broken through 5%. The most recent time was in October 2023, when the S&P 500 index was undergoing a round of adjustments. Currently, the 30-year US Treasury yield remains at around 5.20%. However, according to the survey, close to 60% of respondents believe that the 30-year yield will not rise further to 6% this year.

The reason investors are increasingly worried that US bond yields will continue to rise is mainly due to the combination of multiple pressures. The Middle East conflict is driving up energy costs, making US inflation more sticky; the market still has doubts about the Federal Reserve's monetary policy path; at the same time, the size of the US federal debt is approaching 40 trillion US dollars, and fiscal sustainability issues are receiving increasing attention.

The demand for corporate financing brought about by the boom in artificial intelligence investment is also becoming a new source of pressure on the US debt market. As large technology companies issue a large number of bonds to build AI data centers and computing power infrastructure, competition between corporate bonds and US Treasury bonds for investor capital has clearly intensified.

Since this year, the issuance of US investment-grade corporate bonds has reached close to 1.5 trillion US dollars, an increase of 36% over the previous year. Nomura Securities estimates that large technology companies alone borrow about 200 billion US dollars this year, which is equivalent to about 25% of the net issuance of medium- to long-term treasury bonds by the US Treasury to private investors. This ratio is about five times that of 2025.

The survey participants also had obvious concerns about the mutual influence between AI giant financing and the US bond market. Some investors worry that the continued issuance of bonds by large technology companies will divert the funds originally flowing to US Treasury bonds; others worry that rising US bond yields will also drive financing costs for high-tech companies. As a result, the two may form mutually reinforcing feedback loops.

Fiscal issues are one of the core long-term concerns of the market. More than three-fifths of respondents believe that even if there is a significant change in US economic growth or inflation, it will be difficult to push government debt as a share of GDP to drop significantly, and that the US fiscal situation may continue to deteriorate until eventually causing more serious problems.

Ruben Hovhannisyan, fixed income portfolio manager at TCW Group, said that considering that the US fiscal situation is difficult to effectively improve and the volatility of the bond market is rising, he is not optimistic about the long-term yield curve, so he currently prefers to hold short-term US Treasury bonds rather than long-term bonds.

The market is still cautious about whether the expansion of repurchases by the US Treasury can reverse the trend of long-term debt sell-off. Macro strategist Cameron Crise believes that this move clearly shows that the Ministry of Finance is watching and concerned about rising long-term yields, but increasing the scale of repurchases alone is not enough to reverse the sell-off trend of long-term treasury bonds, but this policy signal may prompt some bears to make up.

Furthermore, despite a sharp rise in US bond yields, the overall performance of the US dollar has remained flat since this year. Most survey participants believe that there is no simple level of yield, and once it breaks through, it will inevitably cause the dollar to fall; the trend of the US dollar depends more on the speed of bond sell-off and changes in actual yield.

Notably, more than 60% of respondents said that the US government's previous intention to help Japan stabilize the yen made them even more concerned about the US Treasury bond market. Japan is currently still the largest overseas holder of US Treasury bonds. Once major overseas buyers' intentions to allocate US bonds change, it may further affect the supply and demand pattern of long-term US bonds.